Bangalore District Court
Hdfc Bank Limited vs Mrs.Kavitha Kiran D/O on 23 March, 2016
IN THE COURT OF XXXVIII ACMM AND XII ASCJ,
BENGALURU
DATED: THIS THE 23rd DAY OF MARCH, 2016
Present: Smt.K.Katyayini, B.Com., LL.B.,
XXXVIII ACMM & XIII ASCJ,
Bengaluru.
C.C. No.23917/2012
Complainant : HDFC Bank Limited,
Branch Office at:
House No.9, Eterna,
20th Main Road,
Koramanagala Industrial
Layout,
Koramangala,
Bengaluru - 560 095.
Represented by its
Authorized Signatory,
Mr.Srikantha Rao.
(By Pleader-
Sri.J.S.Advocates.)
-Versus-
Accused : Mrs.Kavitha Kiran D/o
Muniswamy, M.D., No.769,
21st Cross, 2nd Block, Jnana
Bharathi Nagar,
Bengaluru - 560 056.
(By Pleader -
Sri.K.N.Channappa.)
Offence complained of : U/s 138 of NI Act
Plea of the accused : Pleaded not guilty
Final order : Acquitted
Date of order : 23.03.2016.
(SCCH-15) 2 CC.23917 /2012
JUDGMENT
Complainant has filed the present complaint under Section 200 of Cr.P.C. against the accused for the offence punishable under Section 138 of the NI Act.
2. The brief facts of the complainant's case are that it is a accompany incorporated under the Companies Act, 1956 and a banking company within the meaning of Banking Regulation Act, 1949 having its registered office at Mumbai and its branches at various places and also at the address stated in the cause title of the complaint and represented by its authorized signatory Mr.Srikantha Rao.
b) The accused had availed personal loan and agreed to repay it in EMIs as per the personal loan agreement No.17301768. Under the contract, a sum of Rs.21,250/- was due and payable by the accused, towards which, the accused had issued cheque bearing No.467661 dated 01.10.2012 drawn on HDFC Bank Ltd. which was presented by it at the instance of the accused.
c) But to its utter shock, the said cheque returned dishonored for the reason "insufficient funds" along with (SCCH-15) 3 CC.23917 /2012 the return memo dated 01.10.2012. Hence, it has got issued legal noticed dated 13.10.2012 calling upon the accused to make good the amount due which was duly served on the accused on 17.10.2012, but the accused neither replied nor complied with the demands. Hence, prayed for proper action against the accused.
3. In response to due service of summons, accused put her appearance through her counsel and was enlarged on bail. Copy of complaint is furnished to the accused. Plea of the accused is recorded for the offence punishable under Section 138 of NI Act, for which she pleaded not guilty. Hence, the matter is posted for complainant's evidence.
4. In support of its case, complainant got examined its alleged authorized signatory as CW-1. Got exhibited 7 documents and closed its side.
5. Statement of the accused recorded under Section 313 Cr.P.C. in which accused has denied the entire evidence let in by the complainant and submitted that she has defence evidence to lead. Accordingly, matter was posted to lead the defence evidence of the accused. (SCCH-15) 4 CC.23917 /2012 However, subsequently, her counsel submitted that she has not defence evidence to lead.
6. Therefore, heard both sides on merits of the case. In support of his oral arguments, counsel for the complainant also filed memo along with the xerox copy of the judgment passed by the Hon'ble High Court of Karnataka in Crl.Appeal No.2653/2008 dated 27.09.2013.
b) Per contra, counsel for the accused has filed the xerox copy of the decisions reported in 2001 SCC Kar. 280 : (2001)6 Kar.L.J.193 and 2016(1) KCCR 196. This Court has carefully gone through the above noted judgment and decisions as well as perused the record.
7. Now the points that arise for the due consideration of this Court are;
1. Whether the complainant is duly represented by its authorized signatory?
2. Whether the complainant proves beyond all the reasonable doubts that the accused had issued cheque bearing No.467661 dated 01.10.2012 drawn on HDFC Bank Ltd. towards the legally recoverable debt as contended, which came to be (SCCH-15) 5 CC.23917 /2012 dishonoured as "funds insufficient" as per the cheque return memo dated 01.10.2012?
3. Whether the complainant further proves that it had issued valid legal notice dated 13.10.2012 intimating about the dishonor of all the cheque and demanding the repayment which was duly served on the accused on 17.10.2012 despite of that the accused neither replied nor compled with the demands made in the notice and thereby committed the offence punishable under Section 138 of NI Act?
4. What order?
8. Now the findings of this Court on the above points are as follows:
1. Point No.1 : Negative.
2. Point No.2 : Does not survive for consideration.
3. Point No.3 : Does not survive for consideration.
4. Point No.4 : As per final order for the following.
REASONS
9. POINT No.1:- In the cross-examination of CW-1, the main attack of the accused is about the locus standi/authorization of CW-1 to prosecute her on behalf (SCCH-15) 6 CC.23917 /2012 of the complainant. It is got admitted by CW-1 that the complainant bank is a public limited company having board of directors and to represent as well as to contest on behalf of complainant, resolution passed by the board of directors is necessary. However, he has denied the suggestion that to file any case on behalf of the complainant, board resolution in that regard is necessary.
10. However, he has also deposed that to file the present case, earlier there was GPA and the board resolution is passed during 2015 and he does not know the exact date of the said GPA, however, he has produced the copy thereof. He has admitted that he has not produced the original GPA.
11. To the question that he has no impediment to produce the original GPA, he has deposed that the limitation is already over and that is why he cannot produce the original now. He has denied the suggestion that since no GPA is executed, he has not produced the original thereof. He has also denied the suggestion that (SCCH-15) 7 CC.23917 /2012 Ex.P-1 i.e. board resolution extract is a created document.
12. If the documents are taken note off, admittedly original GPA is not produced. Of course, a xerox copy of the alleged GPA is in file which is not exhibited. Therefore, the said document cannot be considered. However, even for the sake of arguments, the said document is accepted and gone through then also the document is styled as special power of attorney and it is dated 03.08.2012.
13. It is stated in the said special power of attorney that one Mr.Rajesh Kumar in his capacity as Head - Collections, by virtue and in pursuance of the power of attorney dated 31.03.2010 by which he has been appointed to act as attorney of the Bank to exercise the powers as stated in the said power of attorney including the power to further delegate the powers and substitute and appoint one or more attorney or attorneys to exercise the power that he can exercise till 31.03.2013, has appointed CW-1 as true and lawful attorney. (SCCH-15) 8 CC.23917 /2012
14. But admittedly neither the copy or the original of the alleged GPA dated 31.03.2010 executed in favour the executant of this special power of attorney i.e. Mr.Rajesh Kumar is produced before this Court. Hence, what were the powers, the said attorney M.Rajesh Kumar had and whether this special power of attorney was executed in accordance with the said power of attorney is not forthcoming.
15. At this stage, it is important to note that in the decision reported in AIR 2014 SC 630 (A.C.,Narayanan Vs. State of Maharashtra and Anr. & Shri G.Kamalakar Vs. Surana Securities Ltd. and Anr, wherein the Hon'ble Apex Court has held that;
"A. Negotiable Instrument's Act, 1881 - Sections 138 & 142 - Power of Attorney Act, 1882 - Section 2
- Filing of compliant under S. 138 of NI Act through power of attorney is perfectly legal and competent. There must be a statement asserting the personal knowledge of the power of attorney holder in the compliant. The power of attorney holder, who has no knowledge regarding the transactions, cannot be examined as a witness in the case.
C. Negotiable Instruments Act, 1881 - Sections 138, 142 - Power of Attorney Act, 1882 - Section 2 - General power of attorney - Scope of - the functions under the general power of attorney cannot be delegated to another person without a specific (SCCH-15) 9 CC.23917 /2012 clause permitting the same in the power of attorney. The general power of attorney itself can be cancelled and be given to another person."
16. So, in view of the above decision, even for the sake of arguments as noted above, the copy of the special power of attorney in favour of CW-1 is taken into consideration, then also, in view of non production of the alleged power of attorney dated 31.03.2010 executed in favour the executant i.e. Mr. Rajesh Kumar, it is cannot be said that the present special power of attorney in favour CW-1 is in accordance with the terms of the power of attorney dated 31.03.2010 and thereby is executed validly.
17. Moreover, as per the contents of this special power of attorney, the said power of attorney dated 31.03.2010 was valid only up to 31.03.2013 and this special power of attorney was valid only up to 31.03.2012 as per para No.12. Of course, as per record, the present complaint was filed/presented on 08.11.2012 and the sworn statement of recorded on 24.11.2012. So, as those days, the above special power attorney was in force. (SCCH-15) 10 CC.23917 /2012
18. But admittedly, it was expired on 31.03.2012 and as noted above it is the evidence of CW-1 that since the limitation is over, now he cannot produce the original power of attorney. Admittedly, the board resolution at Ex.P-1 was passed on 23.04.2015. So, since 31.03.2013 till 23.04.2015, there was no power/authority/locus standi for CW-1 to represent the case. Moreover, Ex.P-1 is notarized copy of an extract and original resolution not produced before the Court.
19. At this stage it is pertinent to note that in the decision reported in 2016 ACD 151 (BOM) (GOA Bench) (M/s Sharadha Shipping Co. Pvt. Ltd. Goa v. M/s Adhithri Trading Company, Vasco - da - Gama and Anr.) wherein it is held that;
"(A) Negotiable Instruments Act (26 of 1881), Ss.139, 142 - Dishonor of cheque signed by constituted attorney of complainant company - No minutes of proceedings of meeting filed, authorizing him to file complaint and to depose on behalf of compliant - Required quorum for meeting of Board of Directors was two, however only one Director adopted resolution and executed power of attorney -
It could not be said that complaint was filed by company i.e. "payee' or by 'holder in due course" of the cheque - In terms of S.142 complaint is to be filed by payee or holder in due course of the cheque
- Failure by complainant to prove existing liability of (SCCH-15) 11 CC.23917 /2012 accused under cheque in question beyond reasonable doubt - Case of accused that cheque in question was issue as security - Presumption under S.139 was successfully rebutted by accused - Acquittal, proper."
20. In para No.13 of the said judgment it is observed that;
"13. From the above provisions of the Act, it is clear that in the absence of minutes of proceedings of the meeting under Section 193 of the Act, authority Shri Tukaram Parab, the Consultant, to file complainant and to depose on behalf of the complainant or authorizing Shri Chandrakanth Gawas to execute power of attorney in favour of Tukaram to do all such acts, it could not be said that there was such an authorization. There is presumption in respect of such minutes and the minutes are presumed to be true and onus lies heavily on the party asserting that they are not correct. In the present case admittedly, certified \true copy of the minutes of the meeting dated 12.12.2011 were not produced on record. The special power of attorney at Exhibit 45 was also executed by the said Managing Director namely Chandrakanth Gawas and not by both the Directors. The said Power of Attorney was executed in view of a resolution being adopted by the company authorizing the Managing Director Shri Chandrakanth Gawas to appoint a constituted attorney on behalf of the company. But as already stated above, the said resolution at Exhibit 44 was not adopted by both the Directors but a by a single Director. Hence, the said Special Power of Attorney was also not sufficient to authorize Shri Tukaram Parab to institute the compliant and to depose on behalf of the complaint. Since in terms of Section 287(2) of the Act, as quoted above which prescribes the quorum for the meeting of Board of Directors, (SCCH-15) 12 CC.23917 /2012 the required quorum in the present case was two and since only one Director had adopted the said resolution and consequently executed the Power of Attorney, it could not said that the compliant was filed by the company i.e "payee" or by "holder in due course" of the cheque. In terms of Section 142 of the NI Act, a compliant is bound to be filed by payee or as the case may holder in due course of the cheque, notwithstanding anything contained in the Code of Criminal Procedure. Hence, the complaint had to be filed by the company and since it was not proved that Chandrakanth Gawas was the authorized person of the complainant to file the compliant, the complaint itself was not maintainable. ...."
21. In the present case also in view complainant not producing the original or the certified copy of the entire minute, this Court is unable to know that whether the said resolution i.e. board meeting extract at Ex.P-1 is passed with quorum or not.
22. It is the arguments of the counsel for the accused that there should be proper authorization by a company of a person to launch a prosecution of behalf of the company. Since, there is no such proper authorization in favour of CW-1, this complaint is not maintainable. In support of his such an argument, he has placed his reliance on the decision reported in (2001)6 Karn.LJ 193 (Uma Gangadhar (Dr.) v. Classic (SCCH-15) 13 CC.23917 /2012 Coffee and Spices Private Limited, Chickmagalur) wherein the Hon'ble High Court of Karnataka has held that;
A. Criminal Law- Criminal Procedure Code, 1973 - Quashment of proceedings - S.482 - Negotiable Instruments Act, 19881 - S.142(a) - The Hon'ble High court held that there should be proper authorization by a company of a person to launch a prosecution on behalf of the company, from time to time of filing of the complaint, in the absence of which the prosecution would not be validly launched, and is to be quashed. B. Criminal Law - Criminal Procedure Code, 1973 - Quashment of proceedings - S.482 - Negotiable Instruments Act, 1881 - S.142(a) - The Hon'ble High Court held that the prosectuion launched on behalf of a Company be a person not authorized to the date of filing of the complaint, cannot be regularized by subsequent authorization by the company, since the complaint was not maintainable on the date of its filing.
23. Since in the present case on hand, the authorization produced is only Ex.P-1, the notarized copy of the alleged board resolution which is admittedly dated 23.04.2015 which was not in existence as on the date of filing/presenting the present compliant 08.11.2012 and alleged special power of attorney particularly the alleged power of attorney executed in favour of the executant i.e. (SCCH-15) 14 CC.23917 /2012 Mr.Rajesh Kumar is not produced, the above decision is of course helpful to the accused.
24. Per contra, counsel for complainant in support of his arguments that CW-1 is the authorized person has relied on the judgment passed by the Hon'ble High Court of Karnataka, Dharwad Bench in Criminal Appeal No.2653/2008 dated 27.09.2013 wherein it is stated that the court below while addressing the complaint on merits has considered the point whether the complaint was filed and prosecuted by a person competent to represent the complainant company and has answered the same in the negative and acquitted the accused which under challenge in the said appeal.
25. In the said judgment, the Hon'ble High Court of Karnataka has observed the judgments in (1) Gopalakrishna Trading Company Vs. D.Baskaran, (1994) 80 Company Cases 53 Madras; (2) Sagayadurai and Others Vs. J.D. Electronics, (1998) 95 Company Cases 337 Madras; (3) Swadharma Swarajya Sangha Vs. Indian Commerce and Industries Company Private Limited (1999) 98 Company Cases 151 Madras; (4) Shakthi (SCCH-15) 15 CC.23917 /2012 Concrete Industries Limited and others Vs. Valuable Steels (India) Limited, (2000) 100 company Cases 429, Madras; (5) Satish and Company vs. SR Traders (1999) 95 Company Cases 836, Andhra Pradesh; (6) Swastik Coaters Private Limited Vs. Deepak Brothers, (1997) 89 Company Cases 564, Madras; (7) Medchi Chemicals and Pharmaceuticals Private Limited and others Vs. Minerals and Metals Trading Corporation Limited, (2202) 108 Company Cases 24 Madras: (8) the judgment of the Hon'ble High Court of Andhra Pradesh reported in (1977) I ALT (Crl.) 696; (9) Ballabhdas Agarwala V. Chakravarhty (J.C.) (1960) MLJ (Crl.) 677; (10) K.N.Shankaranarayanan V. Shree Consultations and Servies Pvt, Ltd. MANAU/TN/0077/1994: (1993) HML 1298; (11) Satish and Co. Vs. S.R. Traders (1997) 4 All MR 58: (1999) 95 Company Cases 836; (12) Ruby Leather Exports V. K.Venn MANU/TN/0086/1993; (13) Vishwa Mitter V. O.P. Poddar MKANT/SC0378/1983: 1984 CriLJ 1: (14) BOC India Ltd. V. Zine Products and Co. Pvt. Ltd. (1996) 86 Company Cases, 358, Patna High Court; (15) Nibro Ltd. V. National Insurance Co. Ltd. (1191) 70 (SCCH-15) 16 CC.23917 /2012 Company Cases 388, (head note:); (16) S.Sankaran Vs. Emkay Aromatics Limited, (2001) 107 Company Casers 130 Madras; (17) C.V.S.Grfamaphone Records and Tapes (India) Limited Vs. P.A.Noorudeen, (1992) 73 Company Cases 494 (Kerala); (18) Menon Ventures Vs. Birla 3 M Limited ILR 2005 KAR 3167; (19) Director Maruti Feeds and Forms Private Limited vs. Basanna Pattekar ILR 2007 KAR 3155; (20) Om Shakti SC/ST and Minority Credit Co-operative Society Limited Vs. M.Venkatesh, ILR 2007 Kar. 5126 and (21) Samrat Shipping Company Private Limited vs. Dolly George, (2202) 9 SCC 455.
26. The sum and substance of the above judgments observed by the Hon'ble High Court of Karnataka in the above judgment is that company being a juristic person, any person on behalf of the company would have to be authorized by the company in the articles of association or by a separate resolution to depose on behalf of the complainant.
27. It has also held that Section 142 of NI Act lays down that no Court shall take cognizance of any offence punishable under Section 138 except upon a complaint (SCCH-15) 17 CC.23917 /2012 in wring made by the payee or, as the case may be, the holder in due course of the cheque. If the payee is a corporate body or a company incorporated under the Companies Act, in terms of Section 291 of the Companies Act, 1956 it is the Board of Directors who are entitled to exercise all the power as the company is authorized to exercise and do thus a company though legal entity can act only through its board of directors.
28. It is also held that under Section 291 of the Companies Act except where express provision is made, that the powers of a company in person of a particular matter, are to be exercised by the company in a general meeting. The individual directors have such power only as are vested in them by the memorandum or articles of association. The question of authority to institute a suit or other proceeding on behalf of a company is therefore not a technical matter as it is often affects the policy and finances of the company and unless the power constitute a proceeding is specifically conferred on a particular director, he would have no authority to institute a suit or other proceedings on behalf o the company and such (SCCH-15) 18 CC.23917 /2012 power can conferred by the board of directors only passing a resolution in that regard.
29. And ultimately held that having regard to the view of the law that is consistently followed by the Hon'ble High Court of Karnataka, the reasoning of the trial Court in so far as the point whether the compliant was brought by an authorized person has been correctly decided and hence the acquittal of the accused on other grounds as well cannot be held to be illegal.
30. Of course, the counsel for complainant has relied on the above decision since there is board resolution passed in favour of CW-1 at Ex.P-1. But it is important to note that the said resolution was not in existence as on the date of presentation of the complaint and there is no evidence to establish that it is passed with necessary quorum and in view of both the above judgments relied on by the respective parties and also the above noted decisions, the said defect cannot be rectified, by Ex.P-1, the subsequent resolution.
31. Therefore, viewed from any angle, it is apparent on the face of record that the complaint being a company (SCCH-15) 19 CC.23917 /2012 should be represented by an authorized person of the board of directors through a resolution which was not in existence in favour of CW-1 as on the date of accident and thus, the in the present case, the complainant is not represented by the duly authorized person. Accordingly, this point is answered in negative.
32. POINTS Nos.2 AND 3:- In view of answering point No.1 in negative, these points do not survive for consideration. Accordingly, these points are answered.
33. POINT No.4:- In the result, this Court proceeds to pass the following order.
ORDER Acting under Section 252(1) of Cr.P.C., the accused is hereby acquitted for the offence punishable under Section 138 of NI Act.
The bail bond and the surety bond of the accused if any are hereby stand cancelled.
(Dictated to the stenographer, transcribed by her, corrected and then pronounced in the open Court by me on this the 23rd day of March, 2016.) (K.KATYAYINI), XXXVIII ACMM & XIII ASCJ, Bengaluru.
(SCCH-15) 20 CC.23917 /2012ANNEXURE LIST OF WITNESSES EXAMINED ON BEHALF OF COMPLAINANT:
CW1: Srikantha Rao.
LIST OF WITNESSES EXAMINED ON BEHALF OF ACCUSED:
- None -
LIST OF DOCUMENTS EXHIBITED ON BEHALF OF COMPLAINANT:
Ex.P.1 Notarized Copy of Board Resolution Extract dated 23.04.2015.
Ex.P.2 Original Cheque dated 01.10.2012 for Rs.21,150/-.
Ex.P.3 Return Memo Ex.P.4 Office Copy of Legal Notice dated 13.10.2012 Ex.P.5 Postal Receipts (2 in nos.) Ex.P.6 Unserved RPAD Covers (2 in nos.)
Ex.P.6(a) Notices (2 in nos.)) in Ex.P.6 Ex.P.7 Loan Account Extract with Certificate LIST OF DOCUMENTS EXHIBITED ON BEHALF OF ACCUSED:
- Nil -
(K.KATYAYINI), XXXVIII ACMM & XIII ASCJ, Bengaluru.